Correlation Between MicroSectors FANG and VanEck Investment
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and VanEck Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MicroSectors FANG and VanEck Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and VanEck Investment Grade, you can compare the effects of market volatilities on MicroSectors FANG and VanEck Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MicroSectors FANG with a short position of VanEck Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and VanEck Investment.
Diversification Opportunities for MicroSectors FANG and VanEck Investment
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and VanEck is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and VanEck Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Investment Grade and MicroSectors FANG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MicroSectors FANG Index are associated (or correlated) with VanEck Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Investment Grade has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and VanEck Investment go up and down completely randomly.
Pair Corralation between MicroSectors FANG and VanEck Investment
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the VanEck Investment. In addition to that, MicroSectors FANG is 71.11 times more volatile than VanEck Investment Grade. It trades about -0.07 of its total potential returns per unit of risk. VanEck Investment Grade is currently generating about 0.43 per unit of volatility. If you would invest 2,538 in VanEck Investment Grade on August 30, 2024 and sell it today you would earn a total of 14.00 from holding VanEck Investment Grade or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. VanEck Investment Grade
Performance |
| Timeline |
| MicroSectors FANG Index |
| VanEck Investment Grade |
MicroSectors FANG and VanEck Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and VanEck Investment
The main advantage of trading using opposite MicroSectors FANG and VanEck Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, VanEck Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in VanEck Investment will offset losses from the drop in VanEck Investment's long position.| MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. Direxion Daily Technology | MicroSectors FANG vs. Direxion Daily SP |
| VanEck Investment vs. SPDR Bloomberg Investment | VanEck Investment vs. iShares Floating Rate | VanEck Investment vs. SPDR Barclays Long | VanEck Investment vs. Invesco Variable Rate |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |